Committee releases findings into Ofgem's Retail Market Review

25 July 2011

Energy companies found to have mis-sold electricity and gas deals should pay compensation to consumers, MPs on the Energy and Climate Change Committee have demanded in a new report on Ofgem's Retail Market Review.

The select committee is concerned that customers may be pressured into switching supplier on the door-step without proper consideration of the options when confronted with a vast array of complex tariffs and a hard sell. Figures from Ofgem suggest that up to 40% of consumers who switch do not end up with a better deal.

Tim Yeo MP, Chairman of the Committee, said:

"There is mounting concern in Parliament about the doorstep selling techniques of large energy companies.

If it turns out that consumers are being persuaded to switch contracts when it’s not in their best interests, by salespeople keen to earn commission, then it would only be right for the energy companies to cough-up compensation.

SSE recently announced that it would suspend doorstep selling following its hearing in front of the Select Committee, we welcome that decision.

The rest of the Big Six should ditch the Del Boy sales tricks and concentrate on giving customers the information they need to choose the correct contract.”

The report also raises concerns about the propensity for energy prices to 'rise like a rocket and fall like a feather', the growing complexity of tariffs and the market dominance of the 'Big Six' vertically integrated energy companies.

The MPs single out recent price increases from ScottishPower for particular criticism. Customers who use the least energy will be hit the hardest from August when the increases are put into effect providing an apparent incentive for higher consumption – when energy companies are now supposed to be helping consumers become energy efficient.

Tim Yeo MP added:

"Electricity and gas tariffs are now so complex that even the Energy Minister admitted he got confused when trying to switch.

We are worried that a lot of people are simply bamboozled by their bills and the vast array of different tariffs on offer.

The industry should address these problems immediately without waiting for Ofgem or the Government to act."